EXHIBIT (K)(3)
SERVICING AGREEMENT
Agreement made as of July --, 2003, between Xxxxxx
Brothers/First Trust Income Opportunity Fund, a Delaware statutory trust (the
"Fund) and First Trust Portfolios L.P., an Illinois limited partnership ("First
Trust").
WHEREAS, the Fund intends to operate as a closed-end
management investment company, and is so registered under the Investment Company
act of 1940, as amended (the "1940 Act");
WHEREAS, the Fund has authorized the issuance of its no par
value, common shares of beneficial interest (the "Common Shares") and may issue
a class of preferred shares with preference rights, the relative rights, terms
and preferences of which are to be determined in the future by the Board of
Trustees of the Fund (the "Preferred Shares") (holders of the Common Shares and
Preferred Shares are referred to collectively herein as the "Shareholders");
WHEREAS, the Fund wishes to retain First Trust to provide
certain services to the Fund, under the terms and conditions stated below, and
First Trust is willing to provide such services for the compensation set forth
below:
NOW, THEREFORE, In consideration of the premises and mutual
covenants contained herein, the parties agree as follows:
1. Appointment. The Fund hereby appoints First Trust as
Investor Servicing Agent of the Fund, and First Trust accepts such appointment
and agrees that it will furnish the services set forth in paragraph 2 below.
2. Services and Duties of First Trust. Subject to the
supervision of the Fund's Board of Trustees (the "Board"), First Trust will:
(a) Reply to requests for information concerning
the Fund from Shareholders and brokers whose clients hold Fund shares;
(b) Assist in the review of reports to be sent
to Shareholders, and assist in the printing and dissemination of such reports;
(c) Assist in the dissemination to Shareholders
of the Fund's proxy materials and oversee the tabulation of proxies by the
Fund's transfer agent;
(d) Assist in analyzing the amounts available
for distribution as dividends and distributions to be paid by the Fund to its
Shareholders and in the preparation of materials relevant to the Fund's Dividend
Reinvestment Plan;
(e) Establish and maintain a dedicated toll-free
number for sales support and marketing requests on an ongoing basis;
(f) Develop and maintain a website for the Fund
which will provide quarterly updates, weekly and month-end net asset value and
monthly distribution notifications,
as well as hyperlinks to the websites of First Trust and Xxxxxx Brothers Asset
Management Inc. (the "Adviser"), if applicable, for added information;
(g) Communicate to Shareholders any changes made
to the Fund's investment strategies;
(h) Assist in the review of materials made
available to Shareholders and prospective investors to assure compliance with
applicable laws, rules and regulations;
(i) Assist in the filing of advertisements and
sales materials, including information on the Fund's website, as necessary, with
the SEC, the New York Stock Exchange, the National Association of Securities
Dealers, Inc. and any regulatory bodies having jurisdiction over the Fund and
its operations;
(j) Assist in the dissemination of the Fund's
weekly and month-end net asset value, market price and discount information;
(k) Provide persons to serve as officers and
directors of the Fund, as the Fund may request;
(l) Maintain ongoing contact with brokers in
branch offices whose clients hold Fund shares, including providing, among other
things, progress reports on the Fund, dividend announcements and performance
updates;
(m) Assist in the drafting of press releases to
the public;
(n) Make such reports and recommendations to the
Board as the Board reasonably requests or deems appropriate; and
(o) Provide such other services as the parties
may mutually agree from time to time.
3. Compliance with the Fund's Governing Documents and
Applicable Law. In all matters pertaining to the performance of this Agreement,
First Trust will act in conformity with the Fund's Declaration of Trust, By-Laws
and registration statements on Form N-2, as such documents may be amended from
time to time, and in accordance with the directions of the Board and Fund's
executive officers and will conform to and comply with the requirements of the
1940 Act and the rules and regulations thereunder and all other applicable
federal or state laws and regulations.
4. Service Not Exclusive. First Trust's services
hereunder are not deemed to be exclusive, and First Trust is free to render such
services to other funds or clients as long as First Trust's services under this
Agreement are not impaired thereby.
5. Representations and Warranties of First Trust
(a) First Trust represents and warrants that it
has obtained all necessary registrations, licenses and approvals in order to
perform the services provided in this
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Agreement. First Trust covenants to maintain all necessary registrations,
licenses and approvals in effect during the term of this Agreement.
(b) First Trust agrees that it shall promptly
notify the Fund (i) in the event that the SEC or any other regulatory authority
has censured its activities, functions or operations; suspended or revoked any
registration, license or approval; or has commenced proceedings or an
investigation that may result in any of these actions, and (ii) in the event
that there is a change of control in First Trust, change in its management or in
its financial status or otherwise, that adversely affects its ability to perform
services under this Agreement.
(c) The Fund shall be given access to the
records of First Trust at reasonable times solely for the purpose of monitoring
compliance with the terms of this Agreement. First Trust agrees to cooperate
with the Fund and their representatives in connection with any such monitoring
efforts.
(d) First Trust represents and warrants that it
has in place policies and procedures reasonably designed to assure the proper
processing of information provided to First Trust by the Fund.
(e) First Trust represents and warrants that (i)
it is a validly existing entity and has full corporate power and authority to
perform its obligations under this Agreement, (ii) that it has the right to use
and the right to grant the use of the name "First Trust," (iii) this Agreement
has been duly and validly authorized, executed and delivered on its behalf and
constitute its binding and enforceable obligation in accordance with its terms
and (iv) the execution and delivery of this Agreement, the incurrence of its
obligations herein set forth and the consummation of the transactions
contemplated herein and in the Fund's registration statement on Form N-2 will
not constitute a breach of, or default under, its constituent documents or under
any order, rule or regulation applicable to it of any court or any governmental
body or administrative agency having jurisdiction over it.
(f) First Trust agrees that all content,
security features, firewalls, hyper links, etc. on the Fund's website are
subject to the prior review and approval of the Adviser. First Trust agrees to
obtain approval from the Adviser prior to launching the Fund's website and
further agrees to not add or change any content, security feature, firewall, or
hyper link with out prior approval of the Adviser.
6. Compensation. As compensation for its services, the
Fund pays First Trust a monthly fee computed at the annual rate of 0.05% of the
Fund's average daily managed assets (the "Fee"). "Managed assets" means the net
asset value, including outstanding Preferred Shares, plus the aggregate
principal amount of any borrowings. The Fee shall be accrued daily and paid
monthly, in arrears, by the 5th day of each calendar month. The daily Fee
accrual shall be computed by multiplying the fraction of one divided by the
number of days in the calendar year by the Fee, and multiplying this product by
the Managed Assets of the Fund, as of the close of business on the last
preceding business day on which the Fund's Managed Assets were determined.
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7. Limitation of Liability of the Servicing Agent. First
Trust will not be liable for any reasonable error of judgment or mistake of law
or for any loss suffered by the Fund or its Shareholders in connection with the
performance of its duties under this Agreement, except a loss resulting from
willful misfeasance, bad faith or gross negligence on its part in the
performance of its duties or from reckless disregard by it of its duties under
this Agreement ("disabling conduct").
First Trust agrees to indemnify, defend and hold the Fund, the
Adviser, their several officers and directors, and any person who controls the
Fund or the Adviser within the meaning of Section 15 of the Securities Act of
1933, as amended (collectively, "Fund Indemnified Persons"), free and harmless
from and against any and all claims, demands, liabilities and expenses
(including the costs of investigating or defending such claims, demands or
liabilities and any reasonable counsel fees incurred in connection therewith)
which Fund Indemnified Persons may incur, but only to the extent that such
liability or expense incurred by the Fund Indemnified Persons or resulting from
such claims or demands shall arise out of or be based upon any disabling conduct
with respect to the provision of services under this Agreement.
8. Limitation of Liability of the Trustees and
Shareholders of the Fund. Pursuant to the provisions of the Fund's Declaration
of Trust, this Agreement is entered into by the Board not individually, but as
Trustees, and the obligations of the Fund hereunder is not binding upon any such
Trustees or Shareholders of the Fund, but binds only the Fund itself.
9. Duration and Termination. This Agreement shall
continue for an initial period of two years and thereafter shall continue
automatically for successive annual periods, provided such continuance is
specifically approved at least annually by (a) a vote of a majority of the
Fund's Board and (b) a vote of a majority of the Fund's Board members who are
not interested persons (as defined in the 0000 Xxx) of any party to this
Agreement, by vote cast in person at a meeting called for the purpose of voting
on such approval. This Agreement is terminable (a) by the Fund, without penalty,
on thirty (30) days' written notice, by a vote of a majority of the Fund's
Board, or (b) on sixty (60) days' written notice by First Trust. This Agreement
shall automatically terminate in the event of its "assignment" (as is defined in
the 1940 Act).
10. Amendment of this Agreement. No provision of this
Agreement may be changed, waived, discharged or terminated orally, but only by
an instrument in writing signed by the party against which enforcement of the
change, waiver or discharge or termination is sought.
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11. License. The Fund may use the name "Xxxxxx
Brothers/First Trust Income Opportunity Fund" or any other name derived from the
name "First Trust" only for so long as this Agreement or any extension, renewal,
or amendment hereof remains in effect, including any similar agreement with any
organization which shall have succeeded to the business of First Trust as
Investor Servicing Agent. At such time as this Agreement or any extension,
renewal or amendment hereof, or such other similar agreement shall no longer be
in effect, the Fund will cease to use any name derived from the name "First
Trust" or otherwise connected with First Trust, or with any organization which
shall have succeeded to First Trust's business as Investor Servicing Agent.
12. Confidentiality. First Trust agrees on behalf of
itself and its employees to treat confidentially and as proprietary information
of the Fund all records and other information relative to the Fund, the Adviser
and all prior, current or potential shareholders of the Fund and not to use such
records and information for any purpose other than the performance of its duties
hereunder. First Trust also agrees that, without the prior written consent of
the Fund, it will not disclose personal information of any Shareholders of the
Fund ("Personal Shareholder Information"), including to its affiliates, unless
it is required by law to disclose the information to the recipient of such
information. First Trust further agrees, represents and warrants that (a) only
those employees of First Trust who need to do so in carrying out their job
responsibilities may access Personal Shareholder Information; (b) it maintains
physical, electronic and procedural safeguards that comply with federal
standards to protect confidentiality; and (c) it may use Personal Shareholder
Information only for the purposes set forth in this Agreement.
13. Governing Law. This Agreement shall be construed in
accordance with the laws of the State of New York and the 1940 Act, without
giving effect to the principles of conflicts of law thereof. To the extent that
the applicable laws of the State of New York conflict with the applicable
provisions of the 1940 Act, the latter shall control.
14. Books and Records.
(a) In compliance with the requirements of the
1940 Act, First Trust hereby agrees that all records which it maintains for the
Fund are the property of the Fund and further agrees to surrender promptly to
the Fund any of such records upon request. First Trust further agrees to
preserve for the periods prescribed under the 1940 Act the records required to
be maintained under the 0000 Xxx.
(b) First Trust hereby agrees to furnish to
regulatory authorities having the requisite authority any information or reports
in connection with services that First Trust renders pursuant to this Agreement
which may be requested in order to ascertain whether the operations of the Fund
are being conducted in a manner consistent with applicable laws and regulations.
15. Miscellaneous. The captions of this Agreement are
included for convenience of reference only and in no way define or delimit any
of the provisions hereof or otherwise affect their construction or effect. If
any provision of this Agreement shall be held or made invalid by a court
decision, statute, rule or otherwise, the remainder of this Agreement shall not
be affected thereby.
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16. Notices. All notices required or permitted to be sent
under this Agreement shall be sent, if to the Fund, to:
Xxxxxx Brothers/First Trust Income Opportunity Fund
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention:
Telephone No.:
Fax No.:
Or if to First Trust, to:
First Trust Portfolios L.P.
0000 Xxxxxxxxxxx Xxxx
Xxxxx, XX 00000
Attention: Xxxxx Xxxxxxx
Telephone No.: 000-000-0000
Fax No.: 000-000-0000
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IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement on the day and year first above written.
Xxxxxx Brothers/First Trust Income
Opportunity Fund
__________________________________
Name:
Title:
First Trust Portfolios L.P.
__________________________________
Name:
Title:
[Signature Page to Servicing Agreement]
